Research On Asset-backed Securitization Of Internet Consumer Finance

Since its launch in 2005,China's asset securitization has witnessed rapid development,among which Enterprise ABS has seized dominant position in 2016.Meanwhile consumer finance,combined with internet platform,has also been fast growing.The paper accounts the causes of internet consumer finance securitization as follows:(1)originator and administer's motivation;(2)economic structure transformation,requirements of ‘delever' and activating reserve assets;(3)compared with America,there's large growth potential for domestic consumption's contribution to economy as well as securitization ratio of consumer loans;(4)increasing credit risk in bond market and ‘asset shortage' make consumer ABS a more attractive alternative for investors and asset management institutions.Next this article focuses on the case study of JD Baitiao Account Receivables Special Asset Management Plan.This case is unique in that it's the first domestic ABS based on internet consumer credit assets.The case is thoroughly analyzed from aspects of major participants,underlying assets,yield,credit enhancement,risk control and SPV structure.A cash flow simulation and sensitivity analysis are further conducted.Then the paper gives a final assessment of the case,and finds its strengths as follows:(1)underlying assets are well diversified,and are highly feasible to be securitized;(2)senior tranches are robustly protected;(3)yield is attractive to comparable bonds;(4)comprehensive risk control procedures.However,there're still some problems worth noticing,such as:(1)overdue receivables worsens bad loan ratio;(2)credit inquiry system is self-limiting;(3)excess spread can be eroded by JD's inapt sales promotion;(4)term structure of assets pool needs improving;(5)insufficient liquidity;(6)low information disclosure;(7)SPE lacks legal validity.Based on these discoveries,the article tries to give some advice from the industry's perspective,including:(1)enhance Enterprise ABS's liquidity in secondary market;(2)stricter rules on information disclosure;(3)legislation to clarify SPE's position as independent legal entity;(4)explore new patterns of online cooperation of credit inquiry system.